Koch: Quincy prepared to break ties with downtown redeveloper

Tuesday

Feb 18, 2014 at 4:58 PMFeb 19, 2014 at 1:34 PM

Mayor Thomas Koch says the city of Quincy is prepared to break ties with its development partner in the $1.6 billion downtown redevelopment project, a monumental shakeup in the city's plans for a new Quincy Center.

QUINCY — Mayor Thomas Koch says the city of Quincy is prepared to break ties with its development partner in the $1.6 billion downtown redevelopment project, a monumental shakeup in the city's quest for a new Quincy Center.

Koch made the game-changing announcement at Tuesday's city council meeting, saying it plans to sever ties with Street-Works Development because the firm failed to meet its obligations to the city, as required by the 2010 land disposition agreement which governs the project. Koch said the city has given Street-Works 30-days notice to meet these requirements, or else their partnership is over.

Street-Works and the city had originally pledged to bring 3.5 million square feet of new residential, retail, office, entertainment and educational space to downtown Quincy by 2020.

Koch said Merchants Row, the now-stalled first phase of Quincy Center redevelopment, will move forward with Quincy Mutual Fire Insurance as the lead private partner.

"This is not an end, nor a beginning. It's a part of the middle that we're going to have work through," Koch said in a prepared press release. "No one doubted that there would be challenges and obstacles, it's how we meet them that will decided the fate of our downtown. There can be no doubt that based on the work we have already completed together, we will continue to make progress."

Street-Works has been involved in the downtown project for nearly a decade. As a sign of its commitment to the project, Street-Works purchased the Granite Trust Building at 1400 Hancock St. several years ago, opening up offices in the historic downtown building.

Now that the deal between Street-Works and the city – once heralded as an innovative public-private partnership that would revolutionize how urban projects are financed – appears to be dead, uncertainty swirls around the future of Quincy's dream for a new downtown. There's a gaping hole off Chestnut Street left by last year's stalled first phase of construction, leaving business owners and city residents wondering when, or if, redevelopment will resume.

Koch's announcement comes a few days after a project investor said Street-Works would no longer be developing Merchants Row, the first phase of the project, because it had failed to design an economically feasible plan. As a result, New York-based developer Twining Properties would take control of Merchants Row, a block consisting of Chestnut Street, Cottage Avenue the 1400 block of Hancock Street, and the block would no longer be part of the public-private deal.

Koch said Street-Works failed to submit permit plans and financial reports for the first major step of the project by Nov. 24, 2013 – a requirement set by the land disposition agreement. Street-Works had paid a total of $500,000 to extend the deadline for these filings over the past two years, but the city says the developer's latest extension expired in November without a new extension payment.

Koch says the city can legally terminate its deal with Street-Works unless it meets the requirements within 30 days.

"We are charting our own course as we always have, and this is not a decision I take lightly. At the same time, we have an agreement in place with milestones and those milestones must be met," Koch said in the press release. "We are moving forward either way."

Koch says no city money has been spent on the downtown project thus far, with funding coming from private investors - Quincy Mutual Fire Insurance and LaSalle Investment Management - the state and federal government, and Street-Works.

However, in 2007, under former Mayor William Phelan, the city took out a $30 million loan to make infrastructure improvements to kick-start the downtown project. Christopher Walker, a spokesman for Koch, said a lot of that money went toward land purchases for the construction of Hannon Parkway and project planning costs, and some of the money hasn't been spent yet. Walker said the $30 million bond will eventually will be paid back with new tax growth expected to come from future private development downtown.

Questions swirled around Street-Works and the downtown project starting last summer, shortly after the developer and the city held a ceremonial groundbreaking for Merchants Row. In early August, Street-Works announced its development partner, Related Beal, had left the project because of internal restructuring and was being replaced by Twining Properties.

In addition, Street-Works has been slapped with three separate lawsuits from companies which claim the developer breached their contracts and owed them money. One of the suits, filed by a Quincy Center property owner, was resolved out of court, and the others, filed by a marketing firm and Street-Works' former landlord in New York, are still being litigated.

In October, Street-Works halted construction of Merchants Row only four months after the project's groundbreaking, claiming construction costs had become too high in the Boston region and investors weren't willing to finance their existing designs.